Indian The Reserve Bank (RBI) on Wednesday retained its retail inflation forecast for the current financial year 2024-25 at 4.5 percent. RBI Governor Shaktikanta Das, after the fourth bi-monthly monetary policy review of the current financial year, on Wednesday stressed that the central bank will have to keep a close watch on the price situation and strictly control “inflation”, no. So it may pick up pace again. The Governor also said that the Flexible Inflation Targeting (FIT) framework has completed eight years since its implementation in 2016 and is a major structural reform of the 21st century in India.
Estimate for inflation rate
Under the FIT, the central bank has ensured that consumer price index (CPI) based retail inflation remains at four percent with a variation of two percent. The RBI has maintained its consumer price index-based inflation forecast for 2024-25 at 4.5 percent. The inflation rate is expected to be 4.1 percent in the second quarter, 4.8 percent in the third quarter and 4.2 percent in the fourth quarter. Inflation for the first quarter of financial year 2025-26 is estimated at 4.3 percent.
Expected to register a rise in September
“Inflation may rise in September due to adverse base effect and rising food prices,” Das said. Apart from other factors, the main reason for this will be the decrease in production of onion, potato and gram dal in 2023-24. However, this year's growth will be positive due to good Kharif crop, adequate reserves of grains and the possibility of a good crop in the upcoming Rabi season, he said. The overall inflation rate is expected to moderate sequentially in the fourth quarter. Das said there is a risk of inflation going up in the event of adverse weather and increased geopolitical tensions. There has been a lot of fluctuation in the international crude oil prices in October. There has been a significant decline in retail inflation in July and August. The main reason for this is the base effect. Das said that despite the possibility of a rise in food prices in the near term, the price situation at the domestic level indicates a decline in overall inflation going forward.
Image Credit: India-Tv.